I suspect that the Bureau of Labor Statistics report covering November 2012 will be heralded as a solid report, but as usual there are a lot of negatives behind the headline numbers. Seasonally adjusted, 146,000 jobs were added to the economy and the unemployment rate dropped two-tenths of a percent to 7.7%. For those of you who are conspiratorially minded, after upward revisions in the months preceding the election, last month’s jobs number was cut by 33,000 and September’s 16,000.

October 171,000 > 138,000
September 114,000 > 148,000 > 132,000

The potential labor force as represented by the noninstitutional civilian population over 16 increased 191,000 in November from 243.983 million to 244.174 million. Multiplying this by the employment-population ratio (58.7%) gives us an estimate of the number of jobs needed to keep up with population growth: 112,000. The difference between this and the number of jobs created in November is 34,000. While beating population growth, this is still a dismal number. At that rate, it would take 2 1/2 years to create a million jobs above population growth for the unemployed, and there are 12.029 million (SA, seasonally adjusted) unemployed, –even under the BLS’ highly restrictive definition of what constitutes being unemployed. It makes me wonder if our political classes are pinning their hopes on baby boomers exiting the labor force and eventually solving the chronic crisis in unemployment for them.

Turning to the Household (people) data, the labor force declined, seasonally adjusted, 350,000 from 155.641 million to 155.291 million. Unadjusted, it declined 826,000. Basically, there was a big increase in October with the November numbers reflecting a drop back to the September levels for the unadjusted number and half way back for the adjusted one. It is unclear where the October spike came from.

These drops were reflected in the participation rate which fell three-tenths of a percent unadjusted to 63.5% and two-tenths of a percent adjusted to 63.6%.

Seasonally adjusted, employment fell 122,000 from 143.384 million to 143.262 million. Unadjusted, it fell 490,000 from 144.039 million to 143.549 million.

While employment fell, unemployment did not rise. Seasonally adjusted, unemployment fell 229,000 from 12.258 million to 12.029 million. Unadjusted, it fell 337,000 from 11.741 million to 11.404 million. Because employment fell in November, this means that the decrease in the number of unemployed did not come about through their finding jobs but from them being defined out of the labor force. This in turn means that the drop in the unemployment rate from 7.9% to 7.7% (SA) does not reflect any improvement in the economy.

Interestingly, the broader U-6 measure of un- and under employment declined from 14.6% to 14.4% (SA). The U-6 is made up of the 12.029 million unemployed (down 229,000 from October), the marginally attached (unemployed have looked for work in the last year but not the last month) 2.505 million (up 72,000), and involuntary part time workers 8.176 million (down 168,000) for a total of 22.710 million.

What I take to be the BLS’ measure of its undercount (those who do not have a job, want one, but have not looked for one in the last month, not seasonally adjusted) increased 353,000 in November to 6.495 million from 6.142 million, or a rough return to the September level.

As I always note at this point, this measure of the undercount does not reflect well changes in the economy. So I have developed an alternative to it. In my alternate calculation, I compare the current labor force to where we would expect it to be in a solid economic expansion: labor participation rate of 67% (as boomers retire I may have to adjust this figure). The difference between these two is my measure of the undercount.

.67(244.174million) = 163.597 million (where the labor force should be)
163.597 million — 155.291 million = 8.306 million (the real undercount)

This is an increase of 478,000 from the October number of 7.828 million, or approximately back to the September level. This is the capture of the undercount that the BLS misses.

With this number we can now go back and calculate where the U-3 and U-6 really are, that is the real unemployment and real disemployment rates.

Real unemployment: 12.029 million (U-3 unemployment) + 8.306 million (undercount) = 20.335 million (up 249,000 from 20.086 million in October)

The long term unemployed decreased 216,000 from 5.002 million to 4.786 million. Because employment overall was down, I would assume most of this decrease came from workers being exited from the labor force by the BLS definitions.

By race, white unemployment decreased from 7.0% to 6.8% and African-American unemployment decreased from 14.1% to 13.2%, but again these declines are mostly from workers being removed from the labor force.

In the Establishment survey, the headline increase in jobs seasonally adjusted jobs was 146,000 from 133.706 million to 133.852 million. Essentially all of these were in the private sector (147,000 private sector vs. -1,000 public sector).

In terms of the mix of jobs, seasonally adjusted, retail trade gained 52,600, professional and business services 43,000, leisure and hospitality 23,000, and healthcare 22,000. Manufacturing lost 7,000 and construction 20,000.

Weekly hours for all workers (private nonfarm) remained unchanged at 34.4 hours. Average hourly wages for all earners increased 4 cents to $23.63. Average weekly wages increased $1.37 to $812.87.

Weekly hours for production and nonsupervisory employees (blue collar/retail clerical) increased a tenth of an hour to 33.7 hours. Average hourly wages increased 3 cents to $19.84. Average weekly wages increased $2.99 to $668.61. This represents a 1.28% increase Nov. to Nov. The CPI has been running at 2.2%. So real wages remain in decline.

Conclusion

The November jobs numbers were not actually that good. They would have been at or below population growth levels if there had not been bleed through from seasonal retail positions. The mix of new jobs remained poor with most in lower paying professions. There continues to be little movement in hours and wage gains remain below inflation.

Unemployment declined but this was due to a contraction in the labor force and employment, neither good signs. October gains look like a fluke. Boomers began turning 65 in 2011 but the participation rate began heading south in 2001 and again in late 2008 after the meltdown. So it may take some time to tease out how much of the ongoing declines in the participation rate stem from the ongoing economic crisis and how much from secular trends (boomers retiring). And there could well be countervailing tendencies: boomers staying in the labor force because their savings and pensions have been decimated. In any case, November’s participation rate seasonally adjusted was 63.6%. January’s was 63.7%.

Household data (Employment/unemployment)
Statistical significance: +/ – 400,000
The A tables: http://www.bls.gov/cps/cpsatabs.htm
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force

About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered.
To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

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10 comments

retail trade gained 52,600 seasonally adjusted jobs, of which over 33,000 were in clothing stores; unadjusted, clothing store jobs rose from 1,469,600 last year to 1,581,000 this year, a gain of 111,900 real jobs…

so it seems the seasonal adjustments threw this report off a bit…since the 12th was on a monday, and thanksgiving was early, more than normal seasonal hires were included in the establishment survey this year than last…

I honestly think that these reports over time frames of less than six months are pretty useless, but the bottom line is that the labor force participation rate continues to fall. Everything else can be and is manipulated so the participation rate is what I focus on.

“It makes me wonder if our political classes are pinning their hopes on baby boomers exiting the labor force and eventually solving the chronic crisis in unemployment for them.”

There is a conspiracy theory out that what the political class really hopes is that the baby boomers stay in the labor force, so they can still contribute to the 401Ks and the bottom doesn’t fall out of the stock market. This means Gen X and to some extent the millenials taking the brunt of the layoffs and there is anecdotal evidence that this is happening.

“WASHINGTON — Whereas 6 in 10 jobs lost during the Great Recession paid mid-level wages, the majority of jobs created in the recovery — positions such as store clerks, laborers and home healthcare aides — pay much less, according to a new study.”